Monday, 30 June 2003

Stephanie Shepherd, formerly manager of media relations who was fired by the Sacramento Kings last fall, has sued alleging that she was discriminated against because of the behavior of Sacramento player Doug Christie and his wife. According to the story in the Sacramento Business Journal, Christie does not speak to women other than his wife, and apparently his wife's complaints about Shepherd led to a diminution of her duties. Not your normal "jock" behavior that's for sure.

Consistent with the nature of my practice, most of the reports here are on employment as opposed to traditional labor law issues. However, I do enjoy traditional labor work when it presents itself and try to stay abreast of developments. As organized labor's role in the private sector remains at historically low rates, one tactic that has seemed to work for unions is extracting neutrality agreements from employers who have both union and non-union plants. A recent example is Johnson Controls. Robert Gold of the Holland Sentinel has an in depth look at what that promise means to Holland, MI and the 6 Johnson Controls plants located there, which were part of 26 placed on a neutrality list in an agreement between the UAW and Johnson Controls reached last June.

Friday, 27 June 2003

Three years ago, the Supreme Court's decision in Kolstad v. American Dental Association (U.S. 1999) provided that employers should not be held vicariously liable for punitive damages in a Title VII case where a manager's actions were contrary to an employer's good faith efforts to comply with Title VII. Today, the Fourth Circuit explained what that might mean in holding that a district court erred in not striking a punitive damage award. According to the opinion in Bryant v. Aiken Regional Medical Center (4th Cir. 6/27/03) [pdf], the employer had done the following:

That policy, a version of which was included in the employee handbook, stated that "all persons are entitled to equal employment opportunity regardless of race" and that "it is and shall continue to be our policy to provide promotion and advancement opportunities in a nondiscriminatory fashion." ARMC also created a grievance policy encouraging employees to bring forward claims of harassment, discrimination, or general dissatisfaction, and employees were explicitly informed that they would not be retaliated against for making a complaint. There was also a carefully developed diversity training program that included formal training classes and group exercises for hospital employees. And ARMC voluntarily monitored departmental demographics as part of an ongoing effort to keep the employee base reflective of the pool of potential employees in the area.

Given all this, the Court found it improper to assess punitive damages against the employer. Whether an employer must do all that ARMC did to meet the Kolstad mandate will still have to be played out, but the 4th Circuit has at least provided a blueprint for an employer's safe harbor.

The publication of a report by the Economic Policy Institute which said that more than 8 million employees would lose the right to overtime pay has been called "nothing more than a misleading political document full of mischaracterizations, unsupported assumptions and a general ignorance of the current law," by Victoria Lipnic, Assistant Secretary of Labor for Employment Standards. The Sun-Sentinel has the story of the difference of opinion.

Thursday, 26 June 2003

Talk about a legislative nightmare. This sounds like something that could happen in Texas with its famous last minute rush in closing the rather short regular legislative session, but it actually happened next door in New Mexico. An amendment that was supposed to apply only to a newly passed measure protecting against discrimination on the basis of sexual orientation was drafted too broadly and applied to all protected categories. It limited the coverage to any employer with 15 or more employees rather than 4. According to the story on 365Gay.com that will wipe out about 1/4 of the cases brought under the statute. To make matters worse, the error was caught and a replacement bill was passed, but somehow the first bill made it to the governor's desk and was signed into law. No doubt it will get corrected, as Governor Richardson's office told the Advocate. Frankly there are good policy arguments that 15 employees, the level used for Title VII and many states including Texas, is more appropriate. Perhaps it will turn out to be a blessing in disguise, at least for small NM businesses.

Although not a surprise, the Department of Labor's filing of suit against the company, its former CEO's Ken Lay and Jeffrey Skilling and former members of the Board of Directors and the administrative committee of the pension plan can't be good news. The U.S. Newswire has the report. The suit alleges that the defendants failed to protect the interests of workers in the administration of the pension plan. Of all the lawsuits that have and will arise out of the demise of Enron, this may well be the one that people can most identify with, and be most angry about.

A little nerve wracking according to the story in the Government Executive Magazine. Field personnel are understandably concerned about possible reorganizations in light of a study that was released in February and continued concerns about budgets. Hard to focus on the job problems of others, when you are concerned about your own.

Tuesday, 24 June 2003

Law.com has an article with similar views to mine on the impact of yesterday's Supreme Court case, that the next step will be a rewrite of arbitration agreements to specifically prohibit class actions. Although, as the article points out, that strategy may not fly in all states. California is already considering that issue in a couple of cases involving finance companies. For those concerned about arbitration in the employment setting, I continue to be concerned that the biggest danger to its continued viability is abuse (or perceived abuse) in the consumer setting.

You might want to check out the growing body of evidence that shift work, particularly for those on the so called graveyard shift can be hazardous. A Scripps Howard story has some of the latest findings. You know it is a growing phenomenon when there are consulting companies geared specifically to the problem. For information and help in this area check out the Circadian Technology, Inc. website.

The Supreme Court closes the door on Joe's Stone Crabs, see post below, and now according to an Atlanta Journal Constitutionstory, restaurant chain Rio Bravo Cantina has lost a $1.55 million dollar sexual harassment case to five former employees. Since that includes punitive damages of $500,000 to each of three employees, which is $200,000 over the maximum cap for each of the three, the ultimate amount will certainly be less, but still will require more than a few bowls of chips and salsa to recoup. And just a few days ago, Pizza Hut settled a similar claim for $360,000 according to an HR Next report. The EEOC was the driving force in each of these actions.

What price when you feel you are right? A million dollars, at least according to the Sun-Sentinel story about Joe's Stone Crab's unsuccessful defense of its hiring policies. When the U.S. denied cert this week, it brought an end to the claim that the famed Miami restaurant had illegally discriminated against women for the position of waiter. Underneath it all according to the family members who still run the restaurant was the fight over the right to hire the most qualified person for the job.

Check out the Ames Tribune story reporting on a $3 million dollar sexual harassment verdict for a former graduate assistant at Iowa State University who alleged she had been harassed by a now deceased professor. In 1999 a jury heard the case and found no liability. The Iowa Supreme Court reversed the lower court's finding because of an error in the charge. McElroy v. Iowa State University (Iowa 2001). The second time around, Julie Duvall McElroy was more successful. The court case gives more of the facts, including that disciplinary action against the professor was dropped when he was diagnosed with terminal cancer. The facts certainly don't appear to of the type that would make you anticipate a $3 million verdict. The newspaper article doesn't make clear whether there was any change in attorneys or how the case was tried, but it certainly does illustrate the point that anything can, and often does, happen at the courthouse.

Monday, 23 June 2003

If you want to see SHRM's take on the new proposed white collar regulations, check out their Comments submitted to the Department of Labor. Bottom line, they support most, but not all of the proposed changes to the wage and hour regulations.

On a day when all the attention is focused on its decisions on affirmative action, it was a perfect time to issue a very split opinion on the question of whether or not there can be class actions in an arbitration proceedings when it is not covered in the agreement itself. Although not an employment case, the ruling should be applicable to employers who require arbitration as a condition of employment.

In Green Tree v. Bazzle [pdf] a plurality opinion authored by Justice Breyer, becomes the opinion of the Court, only because Justice Stevens joins solely for that purpose. Justice Breyer took the easy out by holding that the determination of the question should have been left to the arbitrator rather than the South Carolina Supreme Court. The SC Court had held that since the arbitration agreement was silent, class action status was permitted.

In the arbitration, applying class action status to those who had not received appropriate documents in connection with consumer finance transactions, the arbitrator had awarded almost $10,000,000 against Green Tree. Today's opinion sets aside the judgment, but if it goes back to the same arbitrator it would seem likely it is only a matter of time before a formal ruling by the arbitrator is made.

Justice Rehnquist, joined by Justices Kennedy and O'Connor, accepted Green Tree's argument, and would have found that the decision was to be made by the courts, not the arbitrator. It would also have found that class actions were not permitted under this particular Agreement. His opinion does note he agrees with one of the parties' contention that class actions are permissible if provided for in the arbitration agreement.

Justice Thomas dissented because of his continued belief that the FAA is not applicable in state courts.

Although it mainly seems as if the Supreme Court punted, it does suggest that an arbitration agreement should clearly state its position on the issue and not remain silent; if it does, then it will be up to the arbitrator to decide. If a decision were made to opt for class action treatment, and right now I am having a hard time thinking of where that would be in the best interests of an employer, it raises questions as to the effect on other claimants, particularly if it proceeded on a non-opt in basis. Hard to believe, for example, that a favorable ruling in an arbitration case that had been certified as a class, will serve as a bar to a large group of claimants who did not actually participate.

Maybe more of those procedural questions will get answered when Green Tree comes back after the arbitrator finds that a class action is appropriate under the Agreement.

Sunday, 22 June 2003

No area of law seems as complicated as the that of wiretapping, both state and federal, which can cover much more than most of us think of as a wiretap. Almost any interception of an aural communication is potentially risky if the individual recording is not a party to the conversation. For the trials of the latest defendant caught in that snare, see Stephens v. Dolcefino (Tx Ct. App. - Houston [1st.] June 12, 2003). An enterprising reporter's use of a pager camera to capture a conversation held at a cocktail buffet party, was enough to allow a cause of action since the audio capture gave rise to a possible cause of action under Section 123 of the Texas Civil Practice and Remedies Code, which creates a cause of action for wiretap victims.

As an aside, the defendants' argued that the pager camera was not able to capture the conversation so that it could be heard. Unfortunately, that could not be proved since the reporter had taped over the conversation in question. I would find it hard to believe that a tape of a significant conversation could be lost in such a manner, except that I had a case where the same thing happened years ago. A key conversation in an investigation, which ultimately was the basis of a termination, which was the basis of the lawsuit, had been lost when the investigator re-used the tape for other interviews. Maybe there is a lesson to be learned.

Friday, 20 June 2003

Several summers ago, the Supreme Court forged a compromise on the issue of employer liability for the sexually harassing conduct of their supervisors. Absent a tangible employment action, employers could avoid liability by proving an affirmative defense which had two prongs: that the employer had a policy designed to prevent sexual harassment and that the employee unreasonably failed to take advantage of the policy. Case law is now developing as to the parameters of the affirmative defense. Yesterday, in Reed v. MBNA Marketing System, Inc. the 1st Cir. showed how elusive the boundaries of the second prong can be.

In this case, a 17 year old employee claimed that her supervisor made sexual comments to her, but more importantly after she baby sat for him, he forced her to have oral sex at his house. He told her not to report the event as they would both lose their jobs and that his father had influence with the owner of MBNA. She continued to work without reporting the event and later resigned. In order to make more money she subsequently returned to the Bank, and ultimately was assigned to the same supervisor. When he again began making sexual comments, she reported his conduct including the assault the prior summer. The Bank immediately began an investigation, but the supervisor resigned before it could be completed. She continued to work at the Bank, and finally resigned and then filed a charge for sexual harassment and brought suit. The District Court granted summary judgment for the employer on the basis of the affirmative defense. While noting that it was an extremely close call, the Circuit Court held that given her age, the threat of retaliation and the claim of family influence, that a jury would not be irrational in finding that she had a reasonable reason for not reporting the earlier assault. If an employer cannot prevail under these circumstances, it seems employers, at least in the First Circuit, may anticipate having to prevail on affirmative defenses after a full blown trial. Hardly an inviting prospect.

If you have or are considering operations in the UK and want an in depth summary of regulatory developments in employment law since 1997, check out the 149 page report, Red Tape in the Workplace, prepared for the Institute of Directors. One money quote:

The increase in the burden on business of the extra employment regulations since 1997 has been very significant and the changes in the burden seem to be accelerating. The extra regulations are promoted and imposed by the current administration in order to, specifically, improve “minimum employment standards” and, more generally, deliver its “social justice” programme. But good employers know that they must offer decent terms and conditions if they want to recruit and keep good staff and bad employers will ignore the Government’s pleas to live in a “fairer and more just society”.

I made a similar comment several years ago when testifying before the Texas legislature, arguing that rather than having government set numerous standards, the marketplace for good employees would provide adequate incentive for employers.

Wednesday, 18 June 2003

Just one of the things that happened while I was wining and wining in Tuscany was the issuance of the final Interim rules (isn't that a great term?) for whistle blower claims under Sarbanes-Oxley. Now Forbes has an article updating recent developments including the status of two high profile claims, one against Duke Energy and the other against Coca Cola.

Hard to sell that to the folks at Nestle, who I am sure are less than happy with the affirmation of a $5.1 million verdict to a former employee hired at age 41, but who was later not promoted when he was 45 and 47. And according to the story in the S.F. Chronicle, adding insult to injury the court affirmed an injunction under California's unfair competition law which requires Nestle's to inform its 20,000 U.S. employees of the ruling and to repudiate a 1994 statement by its chief executive that favored young people as managers.

You could check out Sarah Schmidt, whose 14 year challenge against Rockland County Community College, resulted in $1.35 million jury verdict last week. The Journal News has the story. Schmidt claimed she was terminated when she complained about the misuse of federal funds in the college's Judaic studies program. The college which had apparently spent $320,000 in fees for its own counsel, not counting the time spent in trial, marches forward since its view that the claim was 'baseless' had not changed.

The web is an amazing place, and the longer it exists, the more interesting opportunities appear for those who might have claims and just need an outlet. If you want to check out where future whistleblowers might be going in search of a lawyer, check out the whistleblowerlawyer site here.

Tuesday, 17 June 2003

Professor JoAnna Grossman has an explanation in her Findlaw column of the Supreme Court's recent decision, and a prediction on what it means:

The Court's decision in this case opens doors for more plaintiffs to get their cases to a jury. After Desert Palace, a plaintiff who has faced mixed-motive discrimination, and who can offer some proof of animus or hostility to his or her group status, may be able to win--or at least get before the jury. Prior to Desert Palace, in contrast, many courts would have required that proof to not only be convincing, but also "direct" in order for a plaintiff's claim to survive summary judgment.

The money quote, and this time that could be meant literally for employers if she is right, is in bold.

Although I have not yet looked up the requirements to be licensed as an avvocato, nor do I really understand what a "studio legale" is, I did fall in love, as have many others, with the beauty of Tuscany. But after slogging through six jillion e-mails, and an all day mediation of a sexual harassement case, I am slowly re-acclimating to the world of employment law. Not that it necessarily remains the same. An amazing lot can happen in just a short period it seems. The Texas legislature closed out their regular session and the legislation having the most impact on Texas employment law may well be the procedural changes in litigation contained in House Bill 4 , as opposed to any substantive legislation. If nothing else, because of the danger of imposition of attorneys fees for cases filed after January 1, 2004, it almost ensures a flood of litigation will be filed in December, 2003. And on the federal front, the United States Supeme Court in a case markedly devoid of any judicial activism, held that direct evidence is not required in mixed-motive cases brought under Title VII. The unaminous Desert Palace, Inc. v. Costa [pdf] decision could in fact spark a major uptick in discrimination litigation.